New Estimates of the Gulf Oil Spill and the BP Stock Price

CNN reported last night:

Government scientists Tuesday increased the estimate of oil flowing into the Gulf of Mexico to between 35,000 and 60,000 barrels per day, up to 50 percent more than previously estimated. That translates into 1.5 million gallons to 2.5 million gallons per day. The government's previous estimate, issued last week, was 20,000 to 40,000 barrels per day.

If BP is really going to take 100% of the financial responsibility from the damages causes by this oil spill, one would think that such upward revisions would be bad news for its stock price but that price seems to have gone up today. I wonder how much this story has to do with our little puzzle here:

BP will set aside $20 billion to pay the victims of the massive oil spill in the Gulf, senior administration officials said Wednesday, a move made under pressure by the White House as the company copes with causing the worst environmental disaster in U.S. history.

Even the conservative estimates of the damages from this oil spill put the sum at an estimated figure double this $20 billion fund and those estimates were made before the news about the extent of the oil being leaked. I just hope this deal with the government is not a signal that BP will be able to shift some of the burden onto taxpayers.

Update: Haley Barbour does not like this $20 billion escrow account for the following “reason”:

So it bothers me to talk about causing an escrow to be made, which will -- which makes it less likely that they'll make the income that they need to pay us.

So dedicating $20 billion of BP income to pay for the damages is going to mean we will have less funds to pay for these damages? Leave it to Greta van Susteren of Faux News to not question Governor Barbour’s “logic” here!